Europe's stocks extend gains on US data

European equities extended their gains to one per cent yesterday, after US stock futures erased earlier losses thanks to better-than-expected US non-farm productivity data.

US non-farm productivity rose at a higher-than-expected 2.2 per cent annual pace in the first quarter, while unit labour costs rose less than expected, data showed yesterday.

By 1250 GMT, FTSEurofirst 300 had risen to a session high of 1365.25, up around one per cent on the day. S&P 500 futures were flat, having erased earlier losses.

"It's the non-farm productivity and cost data. Volumes are surprisingly weak so we were hinging on a turnaround in the US and the data's providing that. The weakening euro is also a good sign for stocks," said a trader in London.

European shares were trading higher by midday yesterday, lifted by oil and technology stocks as investors digested a slew of corporate earnings.

By 1136 GMT, the pan-European FTSEurofirst 300 index was up 0.5 per cent at 1,357.93 points, after falling 0.5 per cent in the previous session.

"The market currently tends to ignore the negative news flow and focuses on the positive things," said Markus Steinbeis, head of European equities at Pioneer Investments in Munich.

"Many investors are increasingly counting on an economic recovery in the third or fourth quarter," he said.

Some positive newsflow came overnight from Cisco Systems, the largest US maker of routers and switches that direct Web traffic, which lifted technology stocks in Europe.

Cisco Systems reported better-than-expected quarterly results, but gave a cautious business outlook.

The DJ Stoxx European technology shares index rose 2.1 per cent, lifted by a 2.7 per cent rise in Nokia.

Elsewhere, oil majors rose after the oil price hovered near Tuesday's record high above $122 a barrel. BP rose 1.7 per cent and was the strongest individual positive weight on the pan-European index. StatoilHydro gained 3.3 per cent and Royal Dutch Shell added 0.6 per cent.

US crude rose by eight cents to $121.92 a barrel.

French oil company Total eased 0.9 per cent and was the heaviest negative weight on the pan-European index after it posted a nine per cent rise in first-quarter net profit but would not commit to a production target.

Around Europe, Britain's FTSE 100 index rose 0.5 per cent, Germany's DAX index added 0.8 per cent and France's CAC 40 rose 0.5 per cent.